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Saturday, March 10, 2012

Kingfisher Airlines: You can have fun IN business but not make fun OF business.

I know it is easy to be prophetic in hind sight but in
Kingfisher’s case symptoms of troubled times have been around for over a year. And
this has nothing to do with government policy and everything to do with poor
management and even poorer leadership. An
indicator of all this was how Kingfisher responded to my complaint about baggage
damage last year. It was a small incident
but it clearly conveyed to rot that had set in.

So, what can we learn from this debacle (though I sincerely hope
Kingfisher roars back soon)?

Don’t have fun all
around when your business is bleeding. Kingfisher went around buying F1
team and IPL teams when their airline business was bleeding. I know Vijay
Mallya will say these are separate business but employees and customers don’t see
it this way. You can’t be attending parties and having a gala time and let your
business bleed. Get up and do something about it.

If you have to trust
your son with business, please check for competence first. Clearly, Mallya
senior was blinded by love for his son who was blinded by love for a starlet. Who
is going to run the airline? The lack of maturity and poor management skills
were on display earlier this year when Mallya junior got into an online
squabble about rude behavior of his staff with an actress. If Mallya junior has
to run the airline then it would be better to have some good management support
for him. Which, clearly is lacking.

Don’t ruin a model
that works to push a model that ‘may’ work.
Kingfisher bought Air Deccan when it made no sense to buy. They had different
aircrafts and different business models. Running one Airline is tough and
Mallya tried to run two. Soon, he had to
quit one model. Question – Why did you buy Air Deccan when you did not want to
run it? The basic model of Kingfisher was clearly faulty. No has won by giving
gold class service at tin class rates.

Don’t run a service
business if you don’t have a service attitude. An airline is a service
business where customers expect luxury. If you give some they want more. They also
want to be treated well, even if she comes out of Mumbai airport and waits on
the road in sweltering heat for a cab. Kingfisher got this right early on but
at a high price. And that set the expectation. When it wanted to cut cost it
could not do so because that would mean bringing service down. In the service
business you always remain humble and say sorry. Service
attitude is more than throwing money at customers.

Finally, in business,
Ignorance is not Bliss. Having entered the airline business after due diligence,
we Mallya senior cant now say costs are high and there is no level playing
field. Yes there is none but then this was the case when you entered the
business.

Personally, I would want Kingfisher to do well. Just as I would
like any private enterprise to do well. What can Mallya do? Will save this
question for another day.

4 comments:

It's a fundamental tenet of quality improvement that one does NOT have to reduce quality (or service) in order to reduce cost. Remember "quality is free"? This is what Lean methods are all about -- how to reduce costs by reducing waste, not by reducing service.

Good analysis, Mr Tiwari.Quality is fitness for purpose as Juran said. Dr Mallya thought that by providing higher level of service customers would be prepared to pay extra. Which they were not prepared to do i.e. their perception of Quality was different. Consequently, Kingfisher ended up underutilising aircraft.Second issue was running both full service airline along with low cost airline lead to strategic confusion. Very few companies in the world have succeeded in this.Third issue is the aviation market in India is skewed towards low cost model. Essentially, this is what happened. Of course, aviation market in India is large and getting larger. Kingfisher if manages to overcome these issues it might succeed in the long run.

Kingfisher is notable for its lowest domestic fares among all different airlines and it covers several cities and tiny cities with Chennai. Spice Jet Airlines, also popular for low airfares, has flight to Maa, running on a daily creating the traffic additional versatile and comfy.